iSouth Africa’s regulator, the Financial Intelligence Centre (“FIC”), oversees receipt and analysis of financial intelligence as well as its dissemination. FIC recently released a booklet that provides “insight on some of the methods criminals use to abuse the financial system.” The booklet provides nine different case studies, including one about rhinoceros poaching.
The FIC Act charges the FIC with identifying the proceeds of crime and combatting money laundering and terrorism financing. Studies in the booklet “illustrate different types of criminal activities and demonstrate how the FIC’s financial intelligence reports are pivotal in helping to solve a crime or secure a prosecution.” For each of the nine types of criminal activities, the FIC provides a definition, how the activity works, a case study, and indicators of the activity. The activities that the FIC chose to highlight include:
Utilization of Third-Party Accounts
Such activity might disguise the ownership of funds, hiding its criminal origin. The case study provided by the FIC involved funds transferred to a spouse by an employee suspected of defrauding his employer.
“Changing of Bank Details Fraud”
This activity may cause criminal syndicates to receive payments after innocent parties receive information about a change in a supplier’s bank account. The FIC states that the changing of banking details mid-contract or business accounts receiving funds without showing corresponding commercial activity could indicate fraud.
Corruption
For this activity, the FIC chose to discuss an entity suspected “for its involvement in a scheme to defraud a government department into paying more than R40 million for the rental of properties never occupied by the department.” The FIC analyzed financial statements that revealed gratification payments by the entity to officials working in the department that awarded the tender.
Narcotics
The FIC acknowledged that proceeds from the distribution and sale of narcotics require money laundering in order to be integrated into the financial sector. The FIC used information received from “accountable institutions”—defined under Schedule 1 of FICA to include banks and persons dealing in foreign exchange—to uncover information about a criminal syndicate’s operations. One indicator that the FIC noticed in this case study was the “geographic disjunction between [the] source of funds and dissipation.” In the case study, cash deposits were made in rural areas but spent in larger metropolitan areas.
Cybercrime
In this particular case study, the FIC alluded to cybercrime committed against the central bank of a neighboring country, allegedly conducted by skimming and cloning the central bank’s credit card. In its list of indicators, the FIC states that “[t]ransactions involving institutional credit cards should be subjected to enhanced scrutiny.”
Ponzi Scheme
The FIC analyzed suspicious and unusual transaction reports to identify a foreign exchange trading scheme that allegedly promised unrealistically high yields.
Environmental Crimes
The FIC’s case study for this activity noted that the FIC participated in a multi-agency task team that led to the arrest of suspected rhinoceros poachers. After analyzing financial intelligence relating to syndicate members, the FIC identified the methods used to launder the funds of the rhino horn trade, “which included the use of cash deposits, international funds transfers, and electronic transfers.”
